Money enables society to gain which of the following advantages?

• A. Increases the total amount of resources available
• B. Facilitates exchange by serving as a medium of exchange
• C. Eliminates the need for specialization in production
• D. Removes the problem of scarcity

Answer: (B)

Verified step by step guidance

1. Understand the role of money in an economy: Money primarily functions as a medium of exchange, a unit of account, and a store of value.
2. Analyze each option in the context of money's functions: For example, 'Increases the total amount of resources available' is not directly related to money, as money itself does not create resources.
3. Consider how money facilitates trade: Money eliminates the inefficiencies of barter by serving as a commonly accepted medium of exchange, making transactions smoother and more efficient.
4. Evaluate the option about specialization: Money does not eliminate the need for specialization; rather, it supports specialization by making exchange easier.
5. Recognize that money does not remove scarcity: Scarcity is a fundamental economic problem that money cannot solve; it only helps allocate scarce resources more efficiently.